Mutual Fund News of 1st March 2019 – Reliance Mutual Fund

News U Can Use

March 1, 2019

The Week that was…

February to 1

March

Indian Economy

• Government data showed that the growth forecast of the Indian economy for FY19 was

downgraded to 7% as compared to a growth rate of 7.2% in FY18. This puts India's growth

rate at a five-year low for the current fiscal. The growth estimate of the Indian economy for

the period from Oct to Dec of 2018 was estimated to have slowed down to 6.6% from 7.0%

in the previous quarter. This was the slowest rate of growth in as many as six quarters.

• The growth of eight core sectors slowed for the third consecutive month to 1.8% from 2.7%

in the previous month and 6.2% in the same month of the previous year. The slowdown

came as growth in crude oil sector and refinery product sector remained in contractionary

mode over the month and fell 4.3% and 2.6% respectively.

• The Nikkei India Manufacturing Purchasing Managers' Index (PMI) rose to 54.3 in Feb

2019 from 53.9 in Jan 2019 driven by sharp increase in sales that boosted growth of

output and employment. This marked a 14-month high. Inflows of new work at Indian

goods producers continued to expand during Feb 2019 due to advertising efforts,

supportive government policies and strengthening demand conditions.

• Government data showed that India’s fiscal deficit for the period Apr 2018 to Jan 2019

came in at Rs. 7.71 lakh crore, or 121.5% of the budgeted target for FY19 as against

113.7% in the year-ago period. Net tax receipts were Rs. 10.2 lakh crore or 68.7% of the

budget estimate for FY19 compared with 76.5% in the corresponding period of the

previous year.

Indian Equity Market

Domestic Equity Market Indices

Indices 01-Mar-19 1 Week Return YTD Return

S&P BSE Sensex 36,063.81 0.54% -0.01%

Nifty 50 10,863.50 0.67% 0.01%

S&P BSE Mid-Cap 14,502.82 2.35% -6.06%

S&P BSE Small-Cap 13,981.73 3.43% -4.93%

Source: MFI Explorer

NSE Advance/Decline Ratio

Date Advances Declines

Advance/Decline Ratio

25-Feb-19 1111 691 1.61

26-Feb-19 610 1188 0.51

27-Feb-19 849 955 0.89

28-Feb-19 1076 697 1.54

01-Mar-19 1432 380 3.77

Source: NSE

• Indian equity markets closed on a

positive note. However, domestic

geopolitical tensions had kept the

markets under pressure for most part of

the week. Reports that the finance

minister has assured government

funding support to state-owned banks

also boosted market sentiment. Decline

in crude oil prices on worries over

surge in U.S. crude inventory added to

the gains.

• Further, the U.S. President announced

that the deadline to increase tariffs on

imports from China could be extended,

which supported buying interest. Also,

he stated that the two countries have

made considerable progress in trade

talks. Upbeat global cues after the U.S.

Federal Reserve chairman iterated that

the central bank will be patient while

hiking rates in the future also

contributed to the upside.

Ratios

S&P BSE

Sensex

Nifty 50

S&P BSE

Mid Cap

S&P BSE

Small Cap

P/E

26.53 26.49 31.19 -113.42

P/B

3.02 3.43 2.51 2.12

Dividend Yield

1.19 1.24 1.01 0.92

Source: BSE, NSE Value as on Mar

1, 2019

Indian Equity Market (contd.)

Sectoral Indices

Indices

Last Returns (in %)

Closing* 1-Wk 1-Mth

S&P BSE Auto

18,925.93 1.71% -0.31%

S&P BSE Bankex

30,321.99 0.76% -0.30%

S&P BSE CD

21,499.15 1.02% 0.40%

S&P BSE CG

17,321.48 3.01% -0.81%

S&P BSE FMCG

11,411.57 0.59% -2.87%

S&P BSE HC

13,887.16 2.22% -0.79%

S&P BSE IT

15,359.68 1.65% -0.48%

S&P BSE Metal

10,935.23 2.49% 3.72%

S&P BSE Oil & Gas

13,937.45 2.22% 2.23%

S&P BSE Power

1,848.83 1.92% -2.07%

S&P BSE Realty

1,796.11 -1.19% -0.09%

Source: Thomson Reuters Eikon

*Value as on Mar 1, 2019

• On the BSE sectoral front, indices closed on

a positive note. S&P BSE Capital Goods was

the major gainer, up 3.01% followed by S&P

BSE Metal that grew 2.49%. Gains in metal

stocks likely reflect optimism over progress of

trade talks between U.S. and China. S&P

BSE Oil & Gas and S&P BSE Healthcare

each grew 2.22%.

• Decline in crude oil prices likely gave boost to

the oil and gas sector. S&P BSE Power and

S&P BSE Auto grew 1.92% and 1.71%,

respectively. However, S&P BSE Realty was

the only loser that fell 1.19%.

Indian Derivatives Market Review

• Nifty Mar 2019 Futures were at 10,917.05, a premium of 53.55 points, over the spot

closing of 10,863.50. The total turnover on NSE’s Futures and Options segment for the

week stood at Rs. 53.99 lakh crore as against Rs. 44.09 lakh crore for the week to Feb 22.

• The Put-Call ratio stood at 0.92 compared with the previous week’s close of 0.88.

• The Nifty Put-Call ratio stood at 1.69 against the previous week’s close of 1.37.

Domestic Debt Market

Debt Indicators

(%)

Current

Value

1-Wk

Ago

1-Mth

Ago

6-Mth

Ago

Call Rate

6.20 6.34 6.43 6.41

91 Day T-Bill

6.42 6.43 6.55 6.81

7.80% 2021, (5 Yr GOI)

6.68 6.76 6.92 7.79

7.17% 2028, (10 Yr GOI)

7.56 7.60 7.61 7.95

Source: Thomson Reuters Eikon

Value as on Mar 1, 2019

• Bond yields fell after domestic

geopolitical tensions eased to some

extent. Yields fell further on

speculations that the Indian Monetary

Policy Committee may again cut

interest rate in the upcoming meeting

in Apr 2019 following lower than

expected economic growth.

• Yields on the existing 10-year

benchmark paper (7.17% GS 2028)

fell 4 bps to close at 7.56% from the

last week’s close at 7.60%, after

trading in a range of 7.55% to 7.70%.

• Yield on the upcoming 10-year

benchmark paper (7.26% GS 2029)

fell 3 bps to close at 7.38% as

compared with the previous session’s

close of 7.41% after trading in the

range of 7.36% to 7.51%.

• .

7.50

7.60

7.70

25-Feb 26-Feb 27-Feb 28-Feb 1-Mar

Yield in %

10 -Yr Benchmark Bond ( % )

Source: CCIL

Domestic Debt Market (Spread Analysis)

Maturity

G-Sec Yield

(%)

Corporate Yield

(%)

Spread

bps

1 Year 6.67 8.19 152

3 Year 6.88 8.39 151

5 Year 7.17 8.30 113

10 Year 7.70 8.77 107

Source: Thomson Reuters Eikon Value as on Mar 1, 2019

• Yields on gilt securities fell across 4 to 11

years’ maturities and 14-year paper by up to

14 bps. Yield increased across the

remaining maturities by up to 6 bps barring

1- and 13-year papers that closed steady.

• Corporate bond yields fell across 4 to 8

years’ maturities by up to 22 bps. Yields

increased across the remaining maturities in

the range of 2 bps to 9 bps barring 1-year

paper that closed steady.

• Difference in spread between AAA corporate

bond and gilt contracted across 4 to 7 years’

maturities in the range of 4 bps to 14 bps.

and expanded across the remaining

maturities in the range of 2 bps to 10 bps

barring 1-year paper that closed steady.

-16

-5

6.00

7.00

8.00

3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs

India Yield Curve Shift (%) (W-o-W)

Change in bps 01-Mar-19 22-Feb-19

Yield in %

Change in

bps

Source: Thomson Reuters Eikon

Regulatory Updates in India

• The Securities and Exchange Board of India (SEBI) allowed mutual funds and portfolio

managers to invest in commodity derivatives. The move is expected to bring boost to the

commodities market. The market regulator has also reduced fees payable by brokers to Rs.

10 per Rs. 1 crore of transactions from Rs. 15 earlier, and those by brokers for agri-

commodities derivatives by 93.33% to Re. 1 per Rs. 1 crore of transaction from Rs. 15

earlier.

• According to media reports, SEBI revised rules for open offer exemptions for corporates

that are undergoing debt restructuring. SEBI will revise its norms for valuing money market

and debt securities to make the process transparent and smooth. Also, the market regulator

approved easing of norms for raising of funds through instruments like real estate and

infrastructure investment trusts.

• According to media reports, SEBI stated that asset management companies cannot pay

upfront commission for Systematic Investment Plans (SIPs) registered prior to Oct 22,

2018. The regulator, however, has directed AMCs to pay distributors withheld commission

within three months.

Regulatory Updates in India (contd..)

• The Union cabinet approved a national policy on software products. The policy aims to

position India as a hub for software products development and to create 65 lakh jobs by

2025. The policy will look after 10,000 technology start-ups working on software products.

• The Union cabinet cleared a Rs. 10,000-crore programme under the Faster Adoption and

Manufacturing of (Hybrid) and Electric Vehicles (FAME)-II scheme for a period of three

years effective from Apr 1, 2019. The main objective of the scheme is to encourage faster

adoption of electric and hybrid vehicles by giving upfront incentive on purchase of electric

vehicles (EV) and by establishing necessary charging infrastructure for EV.

• SEBI is thinking of adopting ‘regulatory sandbox’ approach that will help to make best use of

new technologies such as blockchain and artificial intelligence in the securities markets.

Regulators in major financial markets have established ‘regulatory sandbox’ for promoting

financial technology and adoption.

• As per media reports, the Food processing ministry is working on Gram Samridhi Yojana

that will promote the unorganised food processing sector concentrated in rural areas.

Global News/Economy

• U.S. Federal Reserve chief delivered his semi-annual monetary policy report to Congress in

which he emphasized patience on further interest rate hikes. He told lawmakers that the U.S.

economy remains healthy but warned of potential headwinds. The U.S. Fed chief specifically

pointed to volatility in the financial markets toward the end of 2018 and also cited slowing

economic growth in foreign countries, particularly China and Europe, as well was uncertainty

about Brexit and ongoing trade talks between the U.S. and China.

• According to a report from the Commerce Department, U.S. real gross domestic product

grew 2.6% in the fourth quarter of 2018 as against growth of 3.4% in the third quarter 2018.

U.S. GDP growth came in higher than market expectations.

• A report from Eurostat showed that eurozone inflation came in line with market expectations

and was 1.5% in Feb 2019 as against 1.4% in Jan 2019. Meanwhile, excluding energy, food,

alcohol and tobacco, the core inflation rate slowed to 1% in Feb 2019 as against 1.1% in Jan

2019.

• A report from the IHS Markit showed that U.K.’s Purchasing Managers' Index for

manufacturing fell to 52 in Feb 2019 as against 52.6 in Jan 2019. This marked the weakest

level in four months.

Global Equity Markets

Global Indices

Indices

01-Mar-19

1-Week

Return

YTD

Return

Dow Jones

26,026.32 -0.02% 11.57%

Nasdaq 100

7,151.57 0.86% 12.98%

FTSE 100

7,106.73 -1.00% 5.63%

DAX Index

11,601.68 1.26% 9.88%

Nikkei Average

21,602.69 0.83% 7.93%

Straits Times

3,220.40 -1.51% 4.94%

Source: Thomson Reuters Eikon

Value as on Mar 1, 2019

U.S.

• U.S. markets largely remained positive

with buying interest supported by the

U.S. President’s intention to postpone a

planned increase in U.S. tariffs on

Chinese imports.

• Market sentiments found further support

after U.S. economic growth came better

than expected in the fourth quarter of

2018.

Europe

• Most of the European markets witnessed modest gains with investors taking positive cues

on key political developments over Brexit. Investor sentiment were also buoyed after

White House Economic Advisor said that U.S. and China are making significant progress

in their trade negotiations. China has expressed willingness to make key structural

changes to prevent intellectual property theft.

Asia

• Asian markets witnessed mixed trend during the week. Market sentiment was boosted on

reports of significant progress in the trade negotiation between U.S. and China. However,

an abrupt end of the U.S. – North Korea Summit without an agreement on the

denuclearization of the Korean peninsula weighed on the market sentiment.

Global Debt (U.S.)

• Yields on the 10-year U.S. Treasury

bond rose 10 bps to close at 2.76%

compared with the previous close of

2.66%.

• U.S. Treasury prices fell on stronger

than expected U.S. Gross Domestic

Product data for the fourth quarter of

2018. U.S. real GDP grew 2.6% in the

fourth quarter of 2018 as against market

expectations of 2.3% increase.

• Additionally, announcement by the U.S.

President to postpone an increase in

tariffs on Chinese imports from Mar 1

deadline also reduced the safe haven

appeal of the U.S. Treasuries.

• However, expectations that the U.S.

Federal Reserve will remain patient on

increasing interest rates in 2019 and

data showing widening of U.S. trade

deficit in Dec 2018 restricted further

losses.

2.59

2.69

2.79

25-Feb 27-Feb 1-Mar

Yield in %

US 10-Year Treasury Yield Movement

Source: Thomson Reuters Eikon

Commodities Market

Performance of various commodities

Commodities

Last Closing* 1-Week Ago

Brent Crude($/Barrel) 63.15 67.45

Gold ($/Oz) 1,293.31 1,327.71

Gold (Rs/10 gm) 32,819 33,252

Silver ($/Oz) 15.20 15.92

Silver (Rs/Kg) 39,195 40,121

Source: Thomson Reuters Eikon *Value as on Mar 1, 2019

Gold

• Gold prices moved down following

upbeat U.S. GDP data for the last

quarter of 2018. Further, the U.S.

President said that he would delay his

plans for increasing tariffs on Chinese

goods which added to the losses.

However, downside was limited

following a fall in Chinese manufacturing

activity for Feb 2019.

Brent Crude

• Brent crude prices plunged on

increasing U.S. crude inventory.

However, downside was limited

following reports that the Organization

of the Petroleum Exporting Countries

and its allies will continue trimming oil

supply to tighten the oil market.

Baltic Dry Index

• The Baltic Dry Index rose on the back of

improved capesize and panamax

activities.

9.50

10.00

10.50

11.00

1-Feb-19 15-Feb-19 1-Mar-19

Global Commodity Movement

Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)

Global Commodity Prices

Rebased to 10

Source: Thomson Reuters Eikon

-6.38%

-2.59%

-4.48%

Currencies Markets

Movement of Rupee vs Other Currencies

Currency Last Closing* 1-Wk Ago

US Dollar

70.97 71.22

Pound Sterling

94.09 92.83

EURO

80.72 80.75

100 Yen

63.49 64.29

Source: RBI Figures in INR , *Value as on Mar 1, 2019

Rupee

• The Indian rupee rose against the

greenback as domestic geopolitical

tensions eased to some extent. Gains in

the domestic equity market also aided

the rupee.

Euro

• The euro rose against the greenback

after the U.S. President decided to delay

the proposed tariff hikes on Chinese

imports. Gains were extended after the

U.S. Federal Reserve chief emphasised

patience on raising U.S. interest rates.

Pound

• The pound surged against the greenback

as concerns about a disorderly 'no-deal'

Brexit eased to some extent.

Yen

• The yen weakened against the

greenback as its safe haven appeal

dwindled after the U.S. President

decided to delay the proposed tariff hikes

on Chinese shipments.

9.70

9.95

10.20

1-Feb-19 15-Feb-19 1-Mar-19

USD GBP Euro JPY

Source: RBI

Currency Prices ( in terms of INR)

Rebased to 10

Currency Movement

-0.35%

1.36%

-0.05%

-1.24%

The Week that was…

February to 1

March

The Week that was (Feb 25 – Mar 1)

Date Events

Present

Value

Monday,

February 25, 2019

• U.S. Wholesale Inventories (MoM) (Dec P) 1.10% 0.40%

Tuesday,

February 26, 2019

• India Fiscal Deficit (Apr-Jan 2019) 121.50% 113.70%

• U.S. Consumer Confidence Index (Feb) 131.4 121.7

• U.S. Housing Starts (Dec) 1,078k 1,214k

Wednesday,

February 27, 2019

• U.S. Advance Goods Trade Balance (Dec) -$79.5b -$70.5b

• U.S. Factory Orders (Dec) 0.10% -0.60%

• Japan Industrial Production (YoY) (Jan P) 0.00% -1.90%

• Japan Retail Trade (YoY) (Jan) 0.60% 1.30%

Thursday,

February 28, 2019

• India Gross Domestic Product (GDP) (3Q) 6.60% 7.00%

• India Eight Core Sector (Jan) 1.80% 2.70%

• China Manufacturing PMI (Feb) 49.20 49.50

• German Consumer Price Index (YoY) (Feb P) 1.60% 1.40%

• U.S. Gross Domestic Product Annualized (QoQ) (4Q A) 2.60% 3.40%

Friday,

March 01, 2019

• India Manufacturing PMI (Feb) 54.30 53.90

• U.S. ISM Manufacturing (Feb) 54.20 56.60

• U.S. ISM Employment (Feb) 52.30 55.50

• Eurozone Consumer Price Index Estimate (YoY) (Feb) 1.50% 1.40%

• Germany Unemployment Claims Rate (Feb) 5.00% 5.00%

The Week Ahead

March to 8

March

The Week Ahead

Day Event

Monday,

March 4, 2019

• U.S. Durable Goods Orders (Jan P)

• U.S. Housing Starts (MoM) (Jan)

• U.S. Construction Spending (MoM) (Dec)

Tuesday,

March 5, 2019

• India Nikkei Services PMI (Feb 19)

• U.S. ISM Non-Manufacturing/Services Composite (Feb)

• Japan Nikkei Services PMI (Feb)

• U.K. Markit/CIPS Services PMI (Feb)

Wednesday,

March 6, 2019

• Germany Markit Construction PMI (Feb)

• U.S. Trade Balance (Dec)

• U.S. Factory Orders (Jan)

Thursday,

March 7, 2019

• European Central Bank Rate Decision

• Eurozone Gross Domestic Product (YoY) (4Q F)

• U.S. Initial Jobless Claims (Mar 02)

Friday,

March 8, 2019

• U.S. Change in Non-farm Payrolls (Feb)

• U.S. Unemployment Rate (Feb)

• China Trade Balance CNY (FEB)

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